Tax season is nearing. A step-by-step checklist can make tax planning more organized and effective. What items are the most important to complete when getting prepared?

ATS Wealth Circle has a tax planning worksheet that facilitates gathering information and filing a final return. It features a few items you can use in both annual and year-round tax planning. Here are the main components that make up the checklist for you and your tax advisor to review. 

Income and Taxes

You may have more income than your regular salary or paycheck. You may also receive income from:

• Interest
• Dividend payments
• Investment capital gains
• Social Security benefits
• IRA withdrawals
• Education savings accounts
• Health savings accounts (HSAs)

While tax planning, you may have a few other income concerns and strategies to think about. However, you can incorporate them into your checklist. These include:

• Medicare tax exposure
• Concentrated equity positions
• Tax-loss harvesting strategies
• Regular deductions
• Taxes on retirement fund distributions

There may be more considerations, so it’s wise to consult with your financial advisor.

Retirement Planning

Building a retirement fund is the primary goal of many investors and should be addressed somewhere on your tax planning checklist. Worksheet items for retirement planning include:

• Maximize plan contributions (regular or catch-up).
• Consider conversion to a Roth IRA.
• Meet required minimum distributions (RMDs) in retirement.
• Earn tax-free income from municipal bonds.
• Maintain an emergency fund for unexpected expenses.
• Line up long-term healthcare.

Consult with your advisor about aspects of your retirement that affect your tax planning. 

Charitable Donations

Charitable giving is a great way to benefit those in need. Donations to eligible organizations are typically tax-deductible, which can make a major difference in your tax savings.

Think about whether charitable donations are possible for you to make this year. Consult the CARES Act to find out any limits that may be imposed. If you have investment assets that produce high returns, think about redirecting some to a charity.

Small Businesses

If you’re a small business owner, year-round tax planning is a part of your responsibilities. See if your plan allows for higher contributions to your retirement fund. Think about how to funnel income, control deductions, and make plans for succession and business ownership transferring, if necessary.

Estate Planning

Take a closer look at your estate plan goals. These can include gifting assets to your children or grandchildren (even if you don’t have any yet). Review your beneficiary designation forms and make changes where appropriate.

Changes in tax laws and other regulations happen frequently—stay on top of those that may affect your estate. You may seek to fund your beneficiaries’ college educations with tax-deferred investment instruments. Verify that your life insurance policy is adequate for your family or liquidity strategy.

Tax Planning Documents

Depending on your circumstances, you may need to provide some of these documents during your tax preparations:

• Income tax returns from the last two years
• Employer W-2s
• Investment brokerage statements, including transactions, dividends, and interest
• Social Security statements
• Retirement fund distribution statements
• Accounting of profits from partnerships or small businesses
• Mortgage interest statements
• Student loan interest statements
• Receipts for charitable gifts, medical expenses, education costs, relocation expenses, and childcare costs

It’s always a good idea to have both hard-copy and electronic copies of your documentation for backup.

Keep Notes

If there are any other issues or concerns that come up in tax planning, it’s worth taking notes or keeping a journal to manage them effectively. If you run into issues that could complicate your filing, document them to show to your tax professional or financial advisor.

Get Professional Financial Help With Tax Planning

ATS Wealth Circle focuses on the retirement needs of the vibrant Silicon Valley. Workers in this area have changed the world, and because we want to help them to thrive and enjoy life when it’s time to retire, we design retirement plans to fit their unique needs.

If you or someone you know would like to know more about retirement strategies or general financial planning, call (408) 333-9998 or visit us at ATS Wealth Circle online to schedule a meeting today. 

The financial advisors at ATS Wealth Circle operate as independent financial advisors for Addison Avenue Investment Services. Financial advisors offer securities through Raymond James Financial Services, Inc. Member FINRA/SIPC, and securities are not insured by credit union insurance, the NCUA or any other government agency, are not deposits or obligations of the credit union, are not guaranteed by the credit union, and are subject to risks, including the possible loss of principal. ATS Wealth Circle is not a registered broker/dealer and is independent of Raymond James Financial Services. Additionally, First Technology Federal Credit Union and Addison Avenue Investment Services are not registered brokers/dealers and are independent of Raymond James Financial Services and ATS Wealth Circle. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Raymond James Financial Services does not provide tax or legal services. Use a tax planning professional to help with tax planning.